Money, kisses, and electric shocks: On the affective psychology of risk

Prospect's theory's S-shaped weighting function is often said to reflect th e psychophysics of chance. we propose an effective rather than psychophysic al deconstruction of the weighting function resting on two assumptions. Fir st, preferences depend on the affective reactions associated with potential outcomes of a risky choice. Second, even with monetary values controlled s ome outcomes are relatively affect-poor. Although the psychophysical and af fective approaches are complementary, the affective approach has one novel implication. Weighting functions will be more S-shaped for lotteries involv ing affect-rich than affect-poor outcomes. That is, people will be more sen sitive to departures from impossibility and certainty but less sensitive to intermediate probability variations for affect-rich outcomes. We corrobora ted this prediction by observing outcome probability interactions: An affec t poor prize was preferred over an affect-rich prize under certainty, but t he direction of preference reversed under low-probability. We suggest that the assumption of probability outcome independence, adopted both by both ex pected-utility and prospect theory, ay hold across outcomes of different mo netary values, but not different affective values.